Federal Law Gives Tax Break For Transit Commuters

HARTFORD — Tens of thousands of bus and train commuters in Connecticut could save more money on taxes through federal legislation that took effect Jan. 1.

The commuter mass transit benefit allows public transit users to protect up to $255 a month in pre-tax income to help offset the cost of getting to and from work.

Transit users have had the benefit for years, but it's been a bumpy ride: Congress only renewed it one year at a time, sometimes reluctantly and at least once with a steep cut in value.

But the new federal transportation bill passed in December ensures the benefit will be in place for five years. The bill also puts the value on par with tax savings that are available for commuter parking.

"It's great that it's back in play. There's parity, and it's permanent," said John Hartwell, vice chairman of the Connecticut Commuter Rail Council.

Hartwell and Sen. Richard Blumenthal, D-Conn., visited the Greenwich and New Haven Metro-North Railroad stations on Wednesday to tell commuters that the program is in place for 2016 and beyond.

"Permanent restoration of this valuable tax benefit will put money back into the pockets of working families," said Blumenthal, who worked with Sen. Charles Schumer, D-N.Y., to put the measure in the transportation bill. President Barack Obama signed it last month.

Commuters who drive to work and pay for parking have had a similar benefit but with far better protection. It's been in place for years with no need for Congressional renewal.

Last year, drivers were able to put aside $250 a month in pre-tax income to pay for parking. But Congress allowed the transit benefit to slip to $130 a month, a discrepancy that irritated thousands of train and bus passengers.

"This is a significant shift in policy that will promote greater usage of public transit," according to a statement from Michael Melaniphy, president of the American Public Transportation Association. "The federal tax law is now fair and no longer favors driving and parking over public transportation."

The transit benefit had strong political backing from congressmen representing major cities and heavily congested regions such as Philadelphia, Boston, New York and Baltimore. In Connecticut, huge numbers of CT Transit and Metro-North commuters qualify for savings if their company offers the benefit.

The federal government offers payroll tax savings to employers that offer the benefit. Typically companies provide it through a third-party administrator, similar to health savings accounts.